MILAN — Although the worst might be over for the fashion and luxury goods industry, top executives at most listed companies in the sector feel far from out of the woods, according to a new HSBC report.
And HSBC analysts see a long and difficult road ahead.
“We draw the conclusion that the current downturn may differ from the previous crises, which did not last long and were followed by steep recoveries,” wrote HSBC analysts Antoine Belge, Erwan Rambourg and Sophie Dargnies after meeting the leaders of most luxury firms in their coverage.
The analysts offer a more sober outlook for the sector than many of their peers. European luxury stocks have gained 22 percent so far this year compared with a 3 percent gain for the Eurotop 300 and consensus expectations in the market are for a v-shaped recovery from the fourth quarter, according to the report.
“We are less optimistic,” they wrote. “We argue that the luxury industry may face a period of flat or limited growth in 2010 [and even maybe 2011] as several of the drivers of the hyper-growth of 2005-2008 are likely to have disappeared for a while.”
Belge, Rambourg and Dargnies said the Asian crisis in 1998, the Sept. 11, 2001, attacks and the SARS epidemic in 2003, had a short negative impact on luxury goods demand, mostly because fewer people were traveling.
“We believe the current environment differs from these external shocks as we feel there is a need for a ‘structural re-set’ of certain segments of the luxury industry,” they wrote, citing watches in particular, which were mostly driven by mix-price enhancement rather than volume growth.
For this reason they argued hard luxury like watches and jewelry remained the most at risk, adding that consumers would be far less likely to respond to huge average price increases going forward. Less vulnerable was soft luxury and in particular leather goods, where a sizeable portion of products are at more accessible price points, they wrote.
Despite management anticipating a gradual improvement through 2009 as the psychological barriers to luxury consumption, such as fear and guilt, wane and the effects of destocking on wholesale-led businesses soften, the analysts added: “What strikes us is that luxury companies still do not seem to have a clear picture of how their consumers’ behavior has changed. Very little in-depth consumer analysis appears to have been conducted…which leads us to believe that management’s visibility remains pretty low.”
The analysts upgraded Luxottica Group SpA to “overweight” from “neutral” and Tod’s SpA to “neutral” from “underweight,” and downgraded Christian Dior SA to “neutral” from “overweight” and Hermès International to “underweight” from “neutral.”
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)